Who will cover my check?

Amidst the swirling interest in the electricity business these days around renewables, smart grid, plug-in electric vehicles and customer engagement schemes it appears that other people are writing checks for systems, software, hardware and a myriad of items that the incumbent utility is expected to happily cover.

And, not only is the regulated utility expected to cover these costs with a smile on its face, it should do so while potentially putting its system reliability at risk, not raising rates and collecting less revenue to cover imbedded costs.

Huge assumptions are being made by well intentioned -- or well invested -- individuals and companies with a stake in changing the game with regards to the provision of electric power. This is a good thing as disruptive technologies will help propel us to a cleaner, potentially more reliable future. However, the lack of understanding of how our electrical system actually operates -- from both a physics and financial perspective -- may leave us with some untenable choices.

PHEVs and EVs are an ideal example of a set of technologies that can help relieve our dependence on foreign oil, offer cleaner air at lower operating costs. Yet, assumptions of epic proportions are being made. With more than 1,000,000 cars expected on the road in the next five years it has been concluded that the dispersion will be random enough to not cause system problems. However, as has been the case in other technology adoption (computers, high speed internet, Prius's and flat screen TVs) chances are the demographics will find the PHEVs going into similar, higher income neighborhoods. The impact on the overall system will probably be small -- but the impact on specific feeders as a dozen, six (6) kilowatt loads are all plugged in over a short period of time could be dramatic. Of course the issue is resolvable with transformer and other equipment change outs. The question remains: will the local utility and its customers foot the bill?

An even greater challenge will be the impact on utility billing. These systems, often cobbled together after years of postponed investments, are rarely robust enough to handle minor changes, much less something as complex as cross customer billing. Imagine guests showing up at your home today and asking for $10 to cover the gas for their trip? Plugging in an EV or PHEV at a friend's house will have the same potential impact. Clearly this is not a technology challenge -- certainly it is easy to track usage -- but being able to match the sale to the individual's account within the same utility under the current billing regimes is virtually impossible. Now imagine the billing system has to reflect the sale to a different utility! Again the question remains: will the local utility and its customers foot the bill for a new billing system that serves so few?

The potential opening of customers' information to others presents another set of issues, aside from privacy and ownership questions. As in the case of the billing, the sister customer information systems have unlikely been set up to handle data flows to other places be it vendors selling products, software companies offering energy saving programs or competitive affiliates seeking to sell electricity and telephony services. The same question applies: how can the new customer information system be paid for in an era of declining revenue?

There are dozens of similar examples ranging from smart grid applications and carbon reduction strategies to distributed energy resources and renewables which all have a similar impact.

Utilities and their regulators around the U.S. are asking the tough questions but often without the benefit of the third parties causing the rise in costs being in the room. It is all too easy for others not in the utility mainstream to assume that "savings" from new technologies come without significant front end costs -- costs that need to be borne either by the ratepayers or individual companies.

None of this is to say that we should not move down the path to this newly envisioned future nor that utilities will be unwilling (or unable) to meet the challenges head on. The real issue is how to make sure the costs that are being incurred are not simply pushed onto the utility and its ratepayers. This is as true for public power, investor owned utilities as it is for ISOs/RTOs and the co-op community.

What then needs to be done?

Utilities and the energy enterprise needs to force itself to the table to present the issues -- even handedly and unemotionally in order to be seen, heard and engaged.

There will be tremendous opportunities in this changing environment. Winners will find their way to take advantage of the opportunities; losers will argue against the changes.

Being prepared means understanding the issues and having the data ready at hand. It will do little good to argue that the billing system replacement will be required in order to support the changing universe without having a solid idea of the costs, timeframe and risk.

Educating regulators and the public should be as natural as operating the utility system. Invite your regulators and the newcomers to the table and educate them as to the realities of the electric system.

Find ways to try and incorporate the new technologies and business models into your business.

As Mark Twain once said, "I am all for progress, its change I cannot stand." We have to figure out how to cover all those checks that others are writing for us.

Comments

Tue, 05/11/2010 - 4:49pm

The utilities need to have individually metered service drops in areas likely to be used by PHEVs or EVs. These will need a credit card reader, much like today's gasoline pumps. The transaction ends when the vehicle owner unplugs from the recepticle. All fees and rates need to be clearly posted.

Ideally, a company (utility or other entity) could install solar panels over large parking lots, especially at the malls and large employer parking lots. Each support post could have several plugs activated by a credit or other similar card reader. Excess energy would go the the utility or to the property owner - whoever owns the system.

For either case, the customer (vehicle owner) gets the bill via their credit or debit card regardless of the serving utility. At a residence, I would just give my guest a few hours of juice - it wouldn't cost much. I would consider it to be quite rude to charge a freind for a few kWhs, but my rates are fairly low.

Wed, 05/12/2010 - 5:40am

First, I think it should be a very rare situation for any distribution entity to care about an added 72 kw load ("a dozen 6 kw PHEV's") to any feeder. eg. a 100 amp 27.6 kv feeder can handle 4.4 mw, which is equivalent to perhaps 600 x 6 kw PHEV's. Is the author concerned about getting all 6 onto a single padmount distribution transformer feeding perhaps a dozen homes? That would be extremely high (50%) penetration, unlikely for now, and manageable in future with a PROPER piece of billing software, which simply jacks up the rate and notifies the customer's systems until enough of them back off to late-night hours. Any of the electric vehicles we're going to see in any volume in the next few years will be carrying no more than 25 kwh of batteries, which could charge in 4 hours at a 6 kw draw.

And that proper piece of billing software will also need to be able to distinguish automatically that charging the new car which just plugged in at my friend's house should be billed to me, not to him. A proper metering system should do that automatically.

Utilities need to stop dreaming up reasons for resistance and c'mon into the new century. Really, if the new "advanced" metering systems you just made up pay for can't at least be simply upgraded for these capabilities, then it's you who've been wasting my money. Catch up.

Wed, 05/12/2010 - 5:58am

"And that proper piece of billing software will also need to be able to distinguish automatically that charging the new car which just plugged in at my friend's house should be billed to me, not to him. A proper metering system should do that automatically."

Len, you are absolutely correct but the trouble is nobody's smart metering system is equipped or programmed to do this. It's kind of like the chicken and egg problem because smart meter systems have been developed in isolation from the automotive industry who is only recently developing and introducing plug-in vehicles to consumers.

Worse, the smart meters deployed in the field today by the millions would have to all be replaced at huge cost to implement these extra capabilities to handle proper billing of electric vehicle owners. And the problem I have be screaming about on this website for ages now is utility companies don't have (and in many cases don't want to spend) the money for it,

Wed, 05/12/2010 - 4:06pm

Wake up, if one is to going to see significant use of battery power in automobiles the only logical place to meter is on the car itself. If I go to grandma's house or stay in hotel I want to charge my car. In theory when I park for work I want to charge my car. While I am taking a break at rest area I want to charge my car. To support electric vehicles infrastructure beyond smart meters is needed. Personally I could tolerate stopping every hundred miles to charge up if it could be done in around 5 minutes. I think little IPP plants around the intestate offering power at a rate less than utilities for your car would be a good thing. Electric cars are going to need more than special meters in homes to be popular. One they are going need rapid charging ability to support travel. To work it going to require complex billing schemes that support energy purchases were the vehicle is located where ever that may be. It will also have to support both pay before and pay after use. The vehicle will need the intelligence to support its charging and associated billing in any location with out this feature electric cars will not get beyond hybrids with possibly a litle at home night time charging

Thu, 05/13/2010 - 7:30am

Jerry,

I agree with your comments. There needs to be individual vehicle metering that will communicate (somehow) with the location they are charging at, anywhere, anytime. This could potentially be communicating with the customer’s smart meter at the charging location, or some other billing device at the charging location if the metering is built into the vehicle. But wait, this is not so simple…..

This will be a massive infrastructure project because some new electric vehicles are purposely going to have the capability to "plug-in" to ANY standard AC wall outlet. There are literally hundreds of millions of standard wall outlets in North America alone, most within residential homes. If I want to plug into my grandma’s house, is she going to want to use a billing device that talks to my car? I doubt it. The metering of the vehicle’s recharge will almost certainly have to be handled by the home’s smart meter, or alternatively handled by metering electronics within the vehicle that communicates with the home’s smart meter because the location’s smart meter is the only way the local utility company can identify the location of the charging.

Yes indeed a lot has to happen yet in vehicle electronics and in smart metering electronics before electric vehicles can be widely adopted by millions of drivers. In the meantime look for much more controlled recharging of electric vehicles where only special public charging stations or battery swap-out stations can handle this problem. We’ll just have to watch out for our neighbors or fly-by-night strangers parking near our house stringing an extension cord across our lawns at night to steal a free charge from our houses in the meantime.

Fri, 05/14/2010 - 6:13pm

Jerry: How is a "meter in my car" going to help my friend reduce his electricity bill by the amount I used for charging, unless the car communicates with his meter? The only logical system is where when I plug in my car, the car immediately communicates my billing account number to the meter controlling that plug, then communicates the amount of energy used also to the meter before it unplugs. The meter can then reduce the normal customer's account by the amount of consumption and charge my account. The meter in the car needs to be subsidiary to the premises meter which feeds the charging circuit, with communication systems to the billing software.

Mon, 05/17/2010 - 8:46am

Remember, the critical issue is not about the EV technology to monitor and measure usage, nor is it a problem (at least in theory) to get to faster charging. The critical issue is simpler: utility billing systems are cantankerous linkages of software that are not flexible, not easily programmed and are massively expensive to replace. It is not realistic to expect the utilities to throw out their current billing system on behalf of a small percentage of customers, especially given the current financial constraints and other expectations being place upon them at this time.
.

Mon, 05/17/2010 - 12:13pm

Mark,

The subject of your nice article here has been one of the messages I have been preaching on this website for some time now - who is going to pay for all the innovation being touted in the utility industry.

Utilities avoiding replacing their existing billing systems or reprogramming them for a subset of customers to handle EVs is an example of how innovative change in the utility industry is continually stifled by their existing regulatory environment. Without changes to their regulation that would allow utilities to raise extra money somehow for innovation, they will continue to want to treat all customers the same way. And any changes that do come tend to get implemented to all customers or none, and only at a snail's pace as compared with other industries. If changes must always apply to all customers (by regualtion), then any changes that do come along are naturally going to be expensive.

Tue, 05/18/2010 - 6:34am

Mark: I have many years experience writing and designing billing software for large organizations and I fail to see why a fairly simple new retail customer billing system should be in any way a costly venture. After getting 3 yrs experience on the old system, a team of us re-designed and re-wrote the entire activation system for one of the largest mobile phone co's in Canada in about 3 months, not expensive at all. OTOH, I've seen comercial and industrial gas service billing systems which were so complex that after 3 years I was no closer to understanding it than on the first day.

I suspect that your complaint is regarding the complexity of your commercial and industrial billing, not residential. Split em up, and make the complex system pay for itself.

Tue, 05/18/2010 - 7:32am

Len suggests an interesting scenario of splitting the residential billing system (software) from the rest. To some degree this is already happening in places where industry and commercial businesses are offered demand response price breaks, and bulk energy purchase pricing.

I agree the prospect of using the residential customer's smart meter to give credits to customers who charge other people's EVs is in principle not that technically complicated. To the utility company it would simply mean shuffling portions of one bill to another, and technically this wouldn't be difficult from a software prospective assuming the hardware to communicate with the meters is in the vehicles and the meters. However utilities will probably strongly resist this approach for big reasons as follows.

Current smart meter technology is still modeled after the old conventional electromechanical service meters where each has a electronic display on its face that shows cumulative energy consumption at that customer's site. To credit the customer for a portion of the displayed total each time another customer's vehicle is charged would mean the meter must also adjust downwards its display to reflect only the energy billed to the property owner. Similarly the meter at the vehicle owner's site would be appropriately adjusted upwards to reflect his billing. If these meter displays are not adjusted, it opens the door to widespread billing disputes between customers and the utility, which is a nightmare the utilities will fiercely avoid at any cost.

Moreover, here in Canada we have the Measurement Canada agency of our federal government that tests and approves all utility meter designs before authorizing them for commercial use on homes by utilities. One of their criteria for certification of smart meters is they will only permit meters that are tamper proof, where customers AND the utilities are both prevented from altering a meter's internal programming for any reason, especially anything that would change the total energy consumption displayed. As such a utility cannot even upgrade a meter's software for any reason without replacing the meter, even when the meters are designed to be field upgradeable using simple software reprogramming.

So even though Len raises a correct technical argument that might even be simple to implement, there are huge political barriers (including regulation) that prevent utilities from even wanting to do it.

Wed, 05/19/2010 - 7:11am

Bob: I'd suggest that the meter's displayed consumption should remain accurate (eg. not be adjusted down or up to reflect the vehicle charge at an off-home site). The credit or debit should simply show as a new line-item on each customer's monthly billing, one line for each event. No problem.

Wed, 05/19/2010 - 7:18am

The system I suggest would also deal with the issue of vehicle charging at multi-residence buildings with multiple separately-owned vehicles being charged. In buildings where each tenant has an account with the utility (indivually metered apartments) the system would work automatically. In buildings where the management pays all utilities on a single meter, they are simply provided each month by the utility a list of the charge they paid for the past month, detailed by vehicle ID, which they can simply charge onward to the vehicle owner. Naturally they would be able to pre-authorize only a certain group of vehicles for charging using their plugs in the parking lot, and any vehicle not in the authorized list would be refused service.

Wed, 05/19/2010 - 8:30am

Len,

Your suggestion to leave the meter displays as is would work fine provided the utility made it clear to the customer that his billing is based on a software calculation and not the meter display. Indeed this might be a viable solution by default because all of our bills under Time-Of-Use billing will be based on a software calculation at the utility office anyways. For example two customers could have the same total kwhr energy usage displayed on their meters but different energy bills owing because their TOU behaviors differed.

Putting the communication hardware and software into vehicles and all the meters of course is the only real problem i.e. who pays for this.

Thu, 05/20/2010 - 6:03am

A cheap slow powerline carrier communication system, with a filter at the meter, would work nicely. It would update the meter with consumption in watthrs and vehicle ID every ten seconds, so the system wouldn't care when or how the driver unplugged the vehicle.

How much could it cost if it were standard on every vehicle? $20, tops?

Thu, 05/20/2010 - 6:17am

Only real issue I see in it is that this obviously allows the government to add a "road tax" onto the vehicle consumption portion of our bills...

Thu, 05/20/2010 - 8:35am

Len,

It may be in fact less than $20 in large volumes. The big issue is the millions of meters already deployed in the field that would need to be upgraded i.e. replaced, to add a simple power-line carrier transceiver and the additional software to handle vehicles. Now, if those meters belonged to the customer instead of the utility, I’m sure most consumers would gladly do it, but expecting the utility companies to do it is another story.

Thu, 05/20/2010 - 8:41pm

I think this is an easy problem to solve. Each car is provided with a unique internet address. Wherever it is plugged in it communicates with the utility website that calculates how much was consumed and bills it to that internet address. Don't think it would be too hard to fit the vehicle computer with it's own www address - bit like a VIN. Billing would be fully electronic and instant.

Malcolm

Fri, 05/21/2010 - 11:16am

I find this article mildly alarmist. The Chevy Volt pulls less than 2kW when using its 120V charger, over 6-7 hours. The 240V charger works over 2-3 hours, so that probably closer to 4kW. Neither case is 6kW, and its doubtful that a dozen vehicles will show up in a single neighborhood anytime soon.

When central air became popular, the grid managed to deal with that. I'd think the impact on a neighborhood feeders was just as severe in that case, if not more so.

Tue, 05/25/2010 - 2:56pm

Len, Jim, just how efficient are your battery charging systems? Len's back of the envelope numbers seem to indicate north of 90% efficiency, but the real world says different. In fact I'd be surprised if the Volt's charger were better than 65% efficient. Therefore the actual load on the grid is higher than expected. Furthermore Mark's article specifically points out that the demographics of adoption are bound to be non random. The example of central air was given, but if you actually lived through central air coming online, you'd realize that was EXACTLY what went wrong, as new housing developments in cities like Phoenix had 100% central air deployment, causing all kinds of grief for the utility. Retrofitting was even worse, as old infrastructure was pushed beyond its intended design criteria.

The other part of this article I agree with is the impact on billing systems of distributed generation, which is often blithely ignored by newcomers. I worked for some time at a little outfit called Itron, that at the time had something like 80% utility market share. I saw all kinds of cobbled-together utility billing systems that were about as easy to replace as the Golden Gate Bridge. Not something you're going to do in 3 months Len, godlike programming abilities notwithstanding. In fact some of these systems cost dozens of millions of dollars just to deal with the Y2K bug. You think those mainframes are going to suddenly accept c# code? Even if you could buy a compiler, you think it will be bug free? You believe the entrenched IT departments are going to allow you free access into their baby?

Nope, the metaphor here is a superhighway carrying millions of cars daily, and you're going to try and update it without affecting the traffic in any way. Good luck with that.

Wed, 05/26/2010 - 10:13am

"If these meter displays are not adjusted, it opens the door to widespread billing disputes between customers and the utility" -- I fail to see any fact in this statement. Any persons who would dispute a clear line-item adjustment on their bill presentation, will regularly dispute ANY billing you give them anyway.

Jeff: Mainframes make good web and database servers, and that's where they need to be relegated asap. No company which is still running their primary interface software on a mainframe is going to survive the next 10 or 20 years anyway, so I wouldn't worry.

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